Taxes for Seniors

Our Story

It is Sunday, April 2, 2023. and I’m watching the news. An English speaking volunteer dives a van with a large water container that nearly fills the back of the van. She drives to the centre of a town that has not had running water or electricity since shortly after the start of the war in Ukraine. The locals come with 2 litre jugs and fill them, four, six or eight at a time. 

She does this in the morning. She does this again in the afternoon. The volunteer was a tour guide before the war. When asked, she says, “I do it because it’s the right thing to do.” 

One of the locals says that they are resigned to their fate. For now, this is their life.

After a year and a half my wife and I are trying to understand how a simple mistake led to the our loss of $15,000. This is a large chunk of our savings. Savings we hoped would let us continue to live in our home. Should we be resigned. Is this our fate as Canadian seniors?

I know the legislation allows the minister to deprive a pair of senior citizens of $15,000 for a simple mistake made without intent to evade or avoid paying taxes. I also know the law also allows the minister to follow what I thought was the intent and spirit of the law and not impose such a financial disaster.

I realize a three-year rule is easy to implement. When $15,000 is involved would it be so difficult to have someone examine our case and ask, “Is this in line with the government’s policy?”

Fareed Zakaria said, “The rule of law is not pursued, simply to punish people but to create a system of self government that is widely viewed as legitimate and fair.”

Everyone knows it is almost pointless to fight with the CRA. As my accountant said, “It’s not just their bat and ball. It is also their field and their game.” We didn’t want to fight the CRA and didn’t think it was a game. We were simply filing our income tax returns.

The most uncommon thing in the world – is common sense.

Our tax returns were accurate in every way. The CRA simply says the returns were late and as such can not be filed as split pension returns but must be processed as separate, individual returns.  

While I’m no expert, I would think that the government’s goal of encouraging people to file timely returns could be accomplished with less economic violence to a senior couple. Would a late filing fee of $500 or $1000 accomplish the same policy goals?

Financial Disaster

The financial disaster and the emotional anguish and exhaustion brought about by an undeserved $15,000 loss is enormous. We live in a world where every day scam artist make phone calls and send fake emails, hoping that you will make a simple mistake. Their intent is to take $5,000, $10,000 or more from you. 

On the radio, television and in the press there are endless stories of someone who was scammed out of thousands of dollars. The news tells how devastating it was to their feeling of financial security and feeling of self-worth. You are warned of how to protect yourself from such scams.

Various organizations send, in the mail, often with a monthly bill, a notice warning you of how to protect yourself from some entity pretending to be from their organization.

I never in my wildest dreams imagined the government, acting through the CRA, would act so very much like a criminal scam artist.

One simple mistake and my wife and I are out $15,000.

The years we spent saving that money, gone in an instant. We had no intent to evade or avoid taxes. There was no elaborate scheme. Just one simple mistake. We were told it is our responsibility to know the legislation. No single person knows all the legislation. Our tax returns were accurate and complete. They were simply late. 

A penalty or late filing fee would encourage people to file their taxes on time.

Is it possible that one of Canada’s aspirations is to be a society where the elderly are financially abused because they make a simple, unintended mistake. My wife and I filed our income tax returns late, late but completely accurate. 

In 2013 we filed split pension income tax returns for 2010, 2011 and 2012. They were accepted as filed. No warning about late filing in a letter. 

Aspirations – intentions – policy – legislation – and reality 

The government starts with aspirations. Things like blue skies and better times ahead.

Aspirations lead to intentions. Intentions to be fair, for all to pay their share of taxes.

The intentions lead to policies. For instance, the policy for couples to be allowed to file split pension income returns.

The policies lead to the creation of legislation. This is where reality and policies must be merged. The CRA has to do its job with the resources it has. Compromises are made. It is understood that the results of legislation will be examined to see if the policies are indeed being best served.

Legislation has led to a position with some people receiving very brutal treatment, hopefully not inline with the aspirations, intent or policies of the government.